Denied Indemnity

May 29, 2009

Overview

A client faced a lawsuit, filed by a former business partner. The partner was requesting a substantial settlement because he claimed that the Parker, Smith & Feek client raided the partner’s employees putting his business out of operation. The client tried to access the Directors and Officers (D & O) insurance coverage, but the insurance carrier declined because of breach of contract and denied indemnity.

Outcome

The Parker, Smith & Feek claims department believed that while there was a business contract between the client and his business partner, the complaint should not negate the policy as the allegations were unrelated. Parker, Smith & Feek proved that the alleged “hiring away” of the employees was a Wrongful Act, as defined in the policy, and therefore should be covered.

Result

After several months of negotiations, the insurance carrier agreed with Parker, Smith & Feek’s findings and fulfilled its requirements under the policy.